Bloomberg have produced another of Jesse Drucker’s stunning reports on tax avoidance in the last couple of days.

This one is wholly US focussed, but has a strong offshore element and a much broader appeal than the US market because it shows two key things. First that business is still demanding tax favours, even when not due. Second, it shows that old hands in the game like KPMG are still well and truly active.

I’m not going to in any way summarise the arguments in an important article. Just a few extracts:

At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.

The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.

But as Drucker notes later:

The argument that a new tax break for offshore earnings would generate a domestic stimulus “holds no water at all,” said Joel B. Slemrod, an economics professor at the University of Michigan’s school of business and former senior tax economist for President Reagan’s Council of Economic Advisers. U.S. companies are already sitting on a record pile of cash -- $1.9 trillion in liquid assets, according to Federal Reserve data.

“The fact that they have these cash hoards suggests that investment is not being constrained by lack of cash,” Slemrod said.

I am convinced that is true. So what is this about?:

The tax benefits from such profit shifting can have a greater impact on share price than boosting sales or cutting other expenses, since the reduced rate goes straight to the bottom line, said John P. Kennedy, a partner at Deloitte Tax LLP, speaking at the conference in Philadelphia Nov. 3.

In other words, tax avoidance is about aggressively boosting earnings in the short term — and as I have long argued, that’s linked to executive options:

“You may think two bucks isn’t much, but when you’re the CFO and she has 100,000 options, that’s pretty interesting,” [Kennedy] said. He cited large pharmaceutical and biotech companies, including Merck, Amgen Inc. and Eli Lilly, which have reported effective income tax rates at least 10 percentage points below the statutory 35 percent rate.

This link has to be broken. It’ a vital policy issue.

But there’s also the issue of the sheer waste of this whole industry. The description of what KPMG is up to is detailed, and will I suspect to many be deeply unattractive however legal it might be. To quote Drucker again:

“Some of the best minds in the country are spent all day, every day, wheedling nickels and dimes out of the tax system,” said H. David Rosenbloom, an attorney at Caplin & Drysdale in Washington, D.C., and director of the international tax program at New York University’s school of law.

Let’s not pretend the tax avoidance game has stopped: it hasn’t. It’s real, and it costs the rest of us money by shifting the burdens of tax onto those least able to pay. And that’s why it is wrong.